Ten years ago my wife and I hated Christmas shopping. Sure it take enormous amounts of time and energy. But more than that, it played havoc on our December monthly budget. We’d have to come up with money for Christmas gifts out of nowhere while still paying all our other bills. It was a real challenge that often led to frustration and even overspending on gifts. Thankfully, the financial frustrations vanished the day we heard about a simple money management technique called a sinking fund.

The concept of a sinking fund is not new but it took me to my mid-30s to hear about it. Essentially, a sinking fund is a savings fund you create for the express purpose of purchasing something in the future. And, as I’ve found out, it’s a really easy technique anyone can learn. It’s also one of the best practices to help you eliminate overspending and pay for bills, gifts or other budget items that come infrequently.

Because this has revolutionized how my wife and I pay for things, I want to show you how it works. And at the end of the post, I’ll include the template we use to keep track of our savings.

As part of my return to blogging after a brief absence, I’m going to be writing a series of posts that answer some basic money questions. Even for seasoned consumers, it’s important to return to the basics from time to time, if nothing more than to solidify in our minds why we do these things. So today I’m going to be answering the question what is a savings account?

And I’ll be answering some FAQs at the end – one in particular about savings accounts for children.

Savings 101

Other than spend, there is no more basic activity to do with money than to save it. People save for many reasons. But the main purpose of saving is to have a store of money for needs, for wants or for emergencies.

You can save money anywhere. If you are like most people, you probably have a small amount of cash at your home. But the majority of people who want to save large amounts of cash do so by opening a savings account at local bank.

If you are serious about getting out of debt and building any kind of financial future, then you must save money on a regular basis. The best part is you don’t have to begin with much. All you need to do for starters is to save one thousand dollars. That will give yourself some cushion.

When I worked construction I learned that every building requires a solid foundation. For your financial life, that foundation is savings. Without adequate savings you will struggle to get out of debt and will always be susceptible to emergency situations.

Now I know the process of saving money isn’t sexy. We’d rather go spend our money on gadgets and entertainment that would give us an emotional high. Saving money and leaving it in the bank is an emotional blah.

To save one thousand dollars in a month may or may not sound like a daunting task depending on your situation. Some of you may be struggling to pay your basic bills.

But you can save one thousand dollars quickly. In fact, you could do it in only one month. Here’s how.

My wife and I have recently bought a new car. It was used but new to us. The best part about the whole deal was that we didn’t have to take out a car loan.

We paid cash.

Now, we are both in our forties and well established financially. So you might think this purchase was a piece of cake. On the contrary, it wasn’t. It took us two years of preparation to be able to buy this vehicle. But it was worth the effort to avoid needing a car loan.

How did we do it? I’ll share that in a minute and show you the steps to take to never need a car loan again. But first, let’s look at the reasons why people feel the need to take out a car loan in the first place.

Going on vacation soon? Then you will enjoy this post today by Hank McKinsey, rental property owner and blogger at Homebyhank.com.

Taking a vacation can be a fantastic way to relax and regroup from your daily and weekly routine. While vacations are exciting to prepare for, one thing that often gets neglected is your home.

Prepping your home for your time away will ensure that it stays safe and secure, and things like pets or plants aren’t left without care. Vacations can be expensive, so it’s also important to save money during these preparations. With a few quick tips your home, pets, and garden will be happy even in your absence.

The Basics of Going Away on Vacation

Do’s

As part of your vacation planning you should make sure there is a system in place to help you keep your house safe and secure:

In about a month, our oldest child will turn 15. In our state, that means you can apply for a learner’s permit to drive. She hasn’t expressed a big desire to do this yet but I know it’s coming. So naturally I’ve started looking into car insurance for teens to see how much another driver in the household is going to cost me.

What I’ve found is there are many ways to save money on car insurance for teens. There are reasons why your car insurance rates will go up, chiefly because you have an inexperienced driver behind the wheel. Insurance companies are taking on a higher risk of having a payout. Your teens’ enthusiasm for being able to drive coupled with their lack of skill makes accidents more likely.

Short of holding onto the keys yourself, there is no way around paying more on your car insurance with a teen in the house. But you can take steps to lessen the amount of increase. The good news is most of these steps will require the help of your teen. Getting them engaged in the process will go along way in teaching them responsibility. They also might learn some cool financial lessons along the way.

11 Ways to Save on Car Insurance for Teens

One question I routinely get asked by friends and readers of this site is, “Can you teach me how to save money without losing track of what it’s for? How do you account for your money when you are saving for an emergency or for a future need?”

The problem boils down to this issue: you have to keep track of what money is to be used for what purpose. When money is deposited into a savings account it gets mixed in with all the other money in the savings account. How do you keep the boys separated and make sure the money designated for the new dishwasher actually ends up going for the new dishwasher and not the car insurance or the baseball card fund?

Now in the old days you might find yourself reaching into the desk drawer, pulling out an envelope and stuffing cash in it. Then you would write on that envelope “Dishwasher Fund” and hide it away in your house somewhere. You’d do this for any and all items you’d be saving for – vacations, the health insurance bill, groceries, gas and anything else you might think of.

This describes the classic envelope system way of saving money for what’s coming down the road. Doing it this way keeps monies in the envelope they belong and makes sure they get used for their intended purpose.

The envelope system is still a valid tool for managing cash payments for items. However, we’ve moved into the digital age where all banking can be done online, transactions can be downloaded to computer programs and apps have been developed to keep track of your spending on the go. Money is more likely to be direct deposited in the bank rather than kept at home in large sums awaiting use.

Have you ever wondered about the best by date on food? I learned something recently that made me rethink what I thought about that. It all happened the other weekend when I took our church youth group to the Georgia division of the Midwest Food Bank.

The Midwest Food Bank is a faith-based organization whose mission is to alleviate hunger and poverty by gathering and distributing food donations to not-for-profits and disaster sites without cost to the recipients. They distribute nearly $7 million dollars of food each month – food that is donated by food manufacturers, distributors, grocers, community and organizational food drives and from individual donors.

Several times during the night the kids noticed the items we were packaging looked old. The mini-Snickers bars we were counting by the thousands had Valentine’s wrappers on them. The cardboard packaging of the Cheez-It boxes was crushed and the Pop-Tarts boxes were open.

The director explained that as long as the interior packaging is not compromised the item is safe to use. He also mentioned this astonishing fact – Americans throw out 40% of the food whose label says it’s past it best by date. That’s millions and millions of dollars worth of food being discarded each year.

But should all that food be thrown out? How do you know whether it’s safe to eat?

As you are going to see it all depends on the wording.

Understanding Food Product Dating

I’m not a “SAVE THE PLANET!” type of guy. I fail to see how the earth is in any danger of being destroyed or irreparably harmed by the progress of mankind. I don’t worship the earth, view it as our Sacred Mother, or think it has a higher priority than the people who live on it.

But I’m also not a “slash-and-burn” guy. I don’t believe progress should come at the blind expense of what it does to the earth. Nor do I hold to the theory – often expressed in religious circles – that since the whole world is going to burn in the end we can do with it now as we please.

I see extremes when thinking about either of those positions. To me a more balanced approach is called for that recognizes and supports the need for human progress and at the same time develops constraints for the purposes of conservation.

It’s more about wise stewardship than saving or using/abusing.

To that end I believe there are certain issues on which SAVE-THE-PLANET-guy and slash-and-burn-guy could even agree.

Enjoy this post today on healthcare by my good friend Laurie from The Frugal Farmer.

Brian talked recently about the 5 lessons he learned from his recent surgery. Brian is an active guy, and I can only image how much fun he had being sidelined a bit by his torn meniscus and the subsequent surgery. Not to mention the money it costs these days for anything from a simple doctor appointment, a necessary prescription drug or, as in Brian’s case, a surgery.

Not all medical expenses are avoidable: there are many diseases and conditions for which medical treatment (so far, anyway) is the only known help. However, there are many health conditions that are in our control, and many ways for people to cut down on their share of the 3+ trillion dollars that Americans spend on healthcare each year.

4 Ways to Cut Down on Healthcare Costs

Here are some of the things our family does to cut down on annual healthcare costs.

#1: Eat Well

I know most people don’t like to hear it, but a diet that consists of a large amount of fresh vegetables and fruits, healthy fats and minimally processed foods can do wonders for a person’s health.

When it comes to investing money in the stock market, time is your greatest ally and your greatest enemy. The longer you are investing money the greater likelihood you’ll generate great wealth. Shortening that time period by just a few years could significantly reduce the amount of wealth you’ll create.

That’s why it’s important to get started early – in fact, the earlier the better. Time is the most critical element in the investing equation. It doesn’t matter if you are a high school student making minimum wage at a summer job, a college student paying your way through school or married with your first child on the way. The earlier one can begin investing, even in small amounts, the more one can maximize big returns in the long run.

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